Gevo, Inc. GEVO and Future Energy Global (“FEG”) recently entered into an offtake agreement focused on carbon abatement attributes, helping airlines and other businesses cut their CO2 emissions using Sustainable Aviation Fuel (SAF). Under this multi-year deal, FEG will purchase Scope 1 and Scope 3 emissions credits from Gevo tied to 10 million gallons per year of fuel to be produced at the latter’s alcohol-to-jet (ATJ) facility, known as Gevo ATJ-60. These credits will support FEG’s clients — including airlines and corporations — in their efforts to decarbonize. The agreement also gives FEG the option to increase its offtake in the future.

This agreement is expected to support Gevo in securing financing for the construction of its ATJ-60 facility. The company has received a conditional loan guarantee commitment of $1.63 billion from the U.S. Department of Energy’s Loan Programs Office, which includes capitalized interest during construction. In addition, Gevo is raising equity from project-level capital providers. The ATJ-60 facility, which is under development in Lake Preston, SD, aims to meet the demand for affordable jet fuel while reducing carbon emissions. The plant is projected to produce 60 million gallons of SAF annually, at a production cost comparable to traditional jet fuel but with a much smaller carbon footprint.

The aviation industry has set a goal of reaching net-zero CO2 emissions by 2050, with SAF expected to deliver roughly two-thirds of the required emissions cuts. However, achieving this will require a more than 400-fold increase in SAF production. Since SAF isn’t accessible yet at all major airports globally, FEG offers SAF-based Scope 1 credits to airlines that want to purchase additional SAF but can’t physically obtain the fuel at their locations. Likewise, when companies buy and retire SAF-based Scope 3 credits to offset emissions from business travel, they help reduce the additional cost of SAF to airlines, accelerating the expansion of SAF production.

GEVO stock has gained 92.8% in the past year compared with the industry’s 26.8% growth.

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GEVO’s Rank & Other Key Picks

GEVO currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Oils and Energy space are Kolibri Global Energy Inc. KGEI, Excelerate Energy, Inc. EE and Constellation Energy Corporation CEG.

Kolibri Global Energy currently carries a Zacks Rank of 2. KGEI has a trailing four-quarter average earnings surprise of 4.6%. The company's shares have soared 97.9% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Excelerate Energy's current-year earnings is pegged at $1.46 per share. EE, sporting a Zacks Rank of 1 at present, surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with an average earnings surprise of 7.5%. The company's shares have rallied 73.6% in the past year.

Consellation Energy, which currently carries a Zacks Rank of 2, beat the consensus estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 10.2%, on average. The company's shares have rallied 11.5% in the past year.

 

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